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16 / 11 / 2021

WITH THE END OF ITS CASTING VOTE, CARF ELIMINATES THE CHARGE OF CSLL ON GOODWILL GENERATED AMONG COMPANIES OF THE SAME ECONOMIC GROUP

After repeated decisions unfavorable to taxpayers, the 1st Class of the Higher Chamber of the Administrative Tax Appeals Council (CARF), through a pro-taxpayer casting vote, cancelled the levy of Social Contributions on Net Income (CSLL) on the amounts of amortization of goodwill generated in operations carried out by companies of the same economic group.

According to the understanding of the Federal Revenue Service, the goodwill generated in acquisitions between companies of the same economic group would be artificially generated, made only with the purpose of being deductible from the IRPJ and CSLL. CARF’s position was to consider these operations as illegal and abusive, even if there was the existence of a business purpose and economic grounds for the corporate operations proven at the cases.

In the latter case of the CSLL charged on goodwill of corporate transaction of the Unilever group, however, Council Member Caio Quintella, representing the taxpayers, ruled for the cancellation of the tax assessment. Based on arguments about the differences between the IRPJ and CSLL legislation, the rapporteur’s vote was followed by the other taxpayers’ representatives. Thus, on the strength of his casting vote, the votes of the taxpayers’ representatives overcame the votes of the counselors representing the Tax Authorities.

This decision represents an important precedent for taxpayers, who used to lose goodwill cases in the Superior Chamber of the CARF with the former “casting vote”, by which the president, representing the Treasury Secretariat, guaranteed the tax authorities a victory in similar cases.